Step 5: List your Assets

Now we know exactly what our debts (or liabilities) are, in this step we are going to look at what our possessions (also known as assets) are. Assets add a positive value to our financial status: they are the things that we own and therefore add a positive value to our balance sheet.

Making an overview of all your assets, will not only allow you to know exactly how much you own at present, it also gives an insight into what you might be able to do in order to increase the number or value of your assets, thereby increasing your financial value.

When it comes to making an assets list, there are different opinions about what to include on your list, some financial experts say you should make the list as detailed as possible, whereas others believe it is best not to bother with the details such as your furniture and electronics. In my opinion it is best not to worry about the smaller possessions you have (how much would you really get for your furniture anyway?) unless you own a piece that is really valuable, such as antique or very expensive jewellery. With anything else, such as cars for example, remember that their worth goes down with each passing day, so don’t include these, unless again you have an antique car. When you start your list, work out what makes sense to you: whether that is including even the smaller objects, or whether to just focus on your main assets category. As long as you are consistent from one time to the next when you make your list, you can include as many or few items as seems logical to you.

Step 5 – List your Assets – in detail

• Using the same place as where you noted down your debts, be that a journal, spreadsheet or Evernote, make a list of everything that you own i. Think about the following categories:
  • Your house or flat if you’ve bought it – even if you haven’t yet paid off the mortgage;
  • Any other property (buy-to-let for example) that you own;
  • Savings money;
  • Any money in other (current) accounts)
  • Your pension(s)
  • Any stocks, shares, bonds etc.
  • Endowments
  • Antiques or jewellery
  • Life insurance
• Find out the value of the different assets and write these down next to each item. You want to write down the current value of each, regardless of the value that you once paid for it. Say for example you bought your house for $200.000 but due to the current situation it is worth about $30.000 less, then list the value as the actual amount at the moment, i.e. $170.000. Don’t worry about the amount that you are still pending to pay for your mortgage, we are just looking at the value here, so even if you still have a €100.000 loan on your house, list the value as the full $170.000.
• You might need to contact some pension or savings providers in order to get the latest statements for some of your assets, or alternatively make educated guesses. You might not know the exact current value of your house so in that case do some investigating online to find out what similar houses in your area are going for.
• To calculate the current value of your life insurance, you can work out what the current amount would be that you would get if you voluntarily decided to cancel the insurance. Bear in mind that in nearly all cases this might have a penalty or cancelation fee and similarly the amount of money would most likely be taxed if it were paid out at once.
• In terms of pensions you can decide whether to add this or not, the slight issue with pensions is that it isn’t an asset but a future income so you can question whether to include this or not. Another problem with pensions is that over time they are usually corrected for inflation, which makes the amount unpredictable especially if you are still a long time away from retiring. One thing you could do is include the current value of any private pension plans, but leaving out any state pensions or company pensions that you might be eligible to as these last two might change over time. Alternatively you can decide to include an estimation of all of them or leave them all out.

The values of some of your assets (such as your money in a current account) might fluctuate more than others (e.g. your house), so they most likely change regularly. Don’t worry about this too much, for now we have at least an approximate overview of the different assets. I hope that was a slightly more enjoyable step than the previous and that you feel at least slightly more positive than when we looked at our liabilities.